TMI Blog2023 (8) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Ms. Shrunjal Shah, A.R. For the Revenue : Shri Kamlesh Makwana, CIT-D.R. ORDER PER : RAMIT KOCHAR, ACCOUNTANT MEMBER:- This appeal bearing ITA No. 202/Ahd/2023 for Assessment Year: N.A. filed by the assessee arises from the order dated 20th March, 2023 (DIN Notice No. ITBA/EXM/F/EXM45/2022-23/1050968270(1) passed by ld. Commissioner of Income-tax (Exemption), Ahmedabad(hereinafter called the CIT(E) ) , rejecting application filed by the assessee in Form no. 10AB for grant of approval u/s. 80G(5) of the Income-tax Act, 1961(hereinafter called the Act ). 2. The grounds of appeal raised by assessee in memo of appeal filed with Income-Tax Appellate Tribunal, Ahmedabad in ITA No. 202/Ahd/2023 for assessment year : N.A., reads as under:- 1) The Ld. CIT(Exemptions) has erred in law and on facts by not granting exemption under s. 80G to the Appellants without considering that none of the objects of the Appellant company fall within Explanation 3 to Section 80G. 2) The Ld. CIT(Exemptions) has erred in law and on facts by not granting exemption under s. 80G to the Appellants merely because Row 3 of Form 10AB states that the trust is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has stated nature of activities as Religious cum charitable and further in para/row 5 of the said Form 10AB, the assessee has mentioned one of objects as per the Memorandum of Association (MOA)/ instrument for creation of the institution as Religious . The ld. CIT(Exemption) observed from the Memorandum of Association (MOA)/ instrument of creation of the institution of the assessee that some of the objects are religious in nature, which is reproduced as under:- ........ 6) To provide, support religious places renovation, historic places renovations/preservation, and similar causes. ..... The ld. CIT(Exemption) was of the view that approval under Section 80G(5) applies only to any donation to any institution or fund referred to in subclause (iv) of clause (a) of sub-section (2) only if it is established in India for a charitable purpose and if it also fulfills other conditions mentioned therein. The ld. CIT(Exemption) also referred to the provisions of Section 80G(5)(ii) of the Act which stipulates that the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not ,contain any provisions f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat if the primary or dominant purposes of the trust was charitable , another object which by itself may not be charitable but which was merely ancillary or incidental to the primary or dominant purposes would not prevent the trust or the institution from being a valid charity. The judgment is of no assistance in construing Explanation 3 of Section 80G. 10. To reiterate , Explanation 3 does not require the ascertainment of whether the whole or substantially the whole of the institution or fund s charitable purpose is of a religious nature. If it did , it would read differently . It requires the ascertainment of whether there is one purpose within the institution or fund s overall charitable purpose which is wholly or substantially wholly , of religious nature. There is little doubt that clause 2(h) of the trust deed which permits the trustees to support prayer halls and places of worship sets out a purpose the whole or substantially the whole of which is of religious nature , and this has not been seriously disputed . Therefore, in our view, the Trust and the donation by the assessee to it fall outside the scope of section 80G. The ld. CIT(E) held that Section 80G approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee has stated that it has filed all details in response to the earlier notice dated 12.12.2022, and still if any further details/clarifications are required , the assessee may accordingly be notified. It was submitted by ld. Counsel for the assessee that again notice was issued by ld. CIT(E) on 4th February, 2023 in which once again all the details were called by ld. CIT(E) which were earlier called on 12.12.2022, which was also replied by the assessee on 13th February, 2023. It was submitted that this notice/questionnaire dated 04.02.2023 was merely a duplication of earlier notice/questionnaire dated 12.12.2022. It was submitted that order was passed by the ld. CIT(Exemption) rejecting the application of assessee on 20th March, 2023. The ld. counsel for the assessee drew our attention to the order passed by the ld. CIT(Exemption). It was stated that two different orders were passed by ld. CIT(Exemption) on the same date viz. 20th March, 2023 with two different DIN Notice No. , firstly ITBA/EXM/F/EXM45 / 2022-23/ 1050967825(1) dated 20.03.2023 and secondly with DIN Notice No. ITBA/EXM/F/EXM45/2022-23/1050968270(1) dated 20.03.2023. It was submitted that these two or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Devi Temple Trust v. CIT(E) 2017 SCC online ITAT 16460. It was submitted that approval u/s. 80G cannot be denied to the assessee. The ld. counsel for the assessee also relied upon the judgment and order of Hon ble Rajasthan High Court in the case of Umaid Charitable Trust v. UOI and Others in S.B. Civil Writ Petition 5060/2006. It was submitted by ld. Counsel for the assessee that this judgment and order of Hon ble Rajasthan High Court in the case of Umaid Charitable Trust(supra) has duly considered the decision of Hon ble Supreme Court in the case of Upper Ganges Super Mills Ltd.(supra) and held that approval u/s. 80G is required to be granted if the objects are not wholly and/or substantially of religious nature. She drew our attention to various clauses of Memorandum of Association(MOA) , and submitted that there is no object clause which is wholly or substantially religious of nature and hence the assessee is entitled for approval u/s. 80G. It was submitted that expenditure to the tune of 5% of the income can be incurred for religious purpose as per Section 80G(5B) and hence it cannot be said that the assessee cannot incur any expenditure for any religious activities as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s willing to file undertaking before the ld. CIT(Exemption) that its expenditure towards religious activities shall not exceed 5%. Further, the ld. counsel for the assessee prayed that the matter may not be restored back to the file of ld. CIT(Exemption) for re-doing entire exercise afresh w.r.t. grant of approval u/s 80G(5), and rather the Tribunal should grant the approval to the assessee u/s 80G(5). 5. We have considered rival contentions and perused the material on record. We have observed that the assessee is a company registered u/s 8 of the Companies Act, 2013 , on 26.07.2022. The assessee main objects as laid down in Memorandum of Association , reads as under: 1. to promote arts, commerce, education , charity , protection of the environment, climate, change initiatives , sports, science, research , social welfare , healthcare, animal welfare , literature, religion(all religions), 2. To provide and arrange reliefs and supports and guidance to the poor and needy and deserving students and other persons in general , irrespective of any considerations of sex, class, caste , community and/or religion. 3. To accept grants, donations , presents , gifts etc. from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice/questionnaire was issued by ld. CIT(E) on 04.02.2023 asking assessee again to furnish all the details. The assessee again replied to the fresh notice/questionnaire dated 04.02.2023 , vide reply dated 13.02.2023 wherein the assessee again submitted reply to all the queries raised by ld. CIT(E). Thereafter , two separate orders were passed by ld. CIT(E) both dated 20.03.2023, verbatim , which rejected the assessee s application in Form No.10AB for grant of approval u/s 80G(5), with separate DIN s (separate DIN s mentioned in preceding para s of this order-para4/page-8). The ld. CIT(E) rejected the application in Form No. 10AB for grant of approval u/s 80G(5) mainly on the grounds that the assessee s object no. 6 refers to activities which are religious in nature. The object clause no. 6 reads as under : 6. To provide , support religious places renovation , historic places renovations/preservation, and similar causes. The ld. CIT(E) was of the view that once the objects as are contained in the object clause permits carrying on of religious activities, the assessee cannot be allowed approval u/s 80G(5) as approval u/s 80G(5) can only be granted to the institutions which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se which permitted activities which are religious in nature in the case of Umaid Charitable Trust (supra), while in the case of the assessee, there are clauses (1) and (6) which permits the carrying on activities which are religious in nature. It is the say of the ld. Counsel for the assessee that these activities are not for the benefit of any particular religious community or caste. It is strenuously argued by ld. Counsel for the assessee that the assessee s activities are charitable in nature. We have observed that ld. CIT(E) has not showcaused to the assessee that he is relying on clause (6) of the object clause of the MOA and also on the application filed by assessee where in it is mentioned that the activities of the assessee are Religious cum charitable in nature(Para/ row 3 of Form No. 10AB) and Religious(para/row 5 of Form No. 10AB), to reject the assessee s application for approval u/s 80G(5), and principles of natural justice are clearly breached. Adherence to principles of natural justice and fair hearing is the most essential ingredients of efficient and robust judicial delivery system. Merely issuing questionnaire and thereafter condemning assessee without confrontin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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